• Embed Doc
  • Copy Link
  • Readcast
  • Collections
  • CommentGo Back
Download
 
PricewaterhouseCoopers Ghana Budget Highlights: Overall Summary
Overall Summary
2007 Budget: “The Golden Jubilee Budget” but is it golden for thetaxpayer?
“Focus will be on growth within anenvironment of economic stability
”
The Economy
For the second time in Ghana, theBudget was read before the beginningof the new fiscal year.The focus of the 2007 Budget is on thefollowing:

Private Sector Development

Human Resource Development

Good Governance and CivicResponsibility
2006 Performance
Target
 
Actual(projected)to end of2006
Real GDPgrowth6.0% 6.2%12-monthCPI inflation7%-9%10.5%(October)Grossinternationalreserves4 Monthsimports3.6 MonthsimportsDomesticprimarydeficit1.4% ofGDP2.1% ofGDPOverallbudgetdeficit2.1% ofGDP4.9% ofGDPDomesticDebt-GDPratio8.7% 10.1%
The government has indicated itscommitment to Ghana’s obligationsunder the extended West AfricaMonetary Zone Programme (WAMZ)and as such it will support the quotingand trading of national currenciesacross the WAMZ. The government isalso encouraging commercial banks inthe country to engage in the trading ofthese currencies.The government has expressedcommitment to the efforts of theEconomic Community of West AfricanStates (ECOWAS) in having acommon external tariff for the regionby the end of 2007 but it plans toprotect agricultural and industrialsectors against strong competitionfrom imports, in the form of highertariffs, with the introduction of theECOWAS Common External Tariff(CET).The government’s macroeconomicpolicies, strategies and targets for2007 are in line with themacroeconomic framework outlined inthe Growth and Poverty ReductionStrategy II (GPRS II).
2007 Fiscal Year Projections:

GDP growth of at least 6.5%;

Single digit end of period inflationbetween 7% and 9%;

Average inflation of 8.8%;
 
2007 Budget Highlights*
*connectedthinking
The 2007 Budget Statement and Economic Policy was delivered to Parliament on Thursday, 16 November 2006 by Hon. Kwadwo Baah-Wiredu,M.P. and Minister of Finance and Economic Planning We outline in this publication the principal matters covered by the Honourable Minister in his address 
In this Issue 
: 

Overall Summary 

The Economy 

Direct Taxation 

Value Added Tax 

Customs &Excise 

Sectoral Outlook We would point out that changes have been made in prior years to the proposals made in the Budget Statement before the relevant bills have been published and enacted 
 
PricewaterhouseCoopers Ghana Budget Highlights: Overall Summary 2
Overall Summary

Accumulation of internationalreserves to at least threemonths of import cover;

Domestic primary deficit of0.6% of GDP; and

An overall budget deficit of3.2% of GDP.
Direct Taxation
To encourage land title registrationand investments, a one yearinterest waiver amnesty has beenintroduced on rent owed to thegovernment.In addition, land title registrationfees will no longer be based on thevalue of the land but rather at flatrates.Various tax reliefs for individualshave been increased.The taxation of accommodation andvehicle benefits in kind has beenrevised. This revision will decreasethe taxable benefit foraccommodation but in most casesincrease the taxable benefit onvehicles to employees.A Tax Arbitration Board is to beestablished to spur transparency intax administration and expediteresolution of appeals.The National Reconstruction Levy(NRL) is completely abolished witheffect from 1 January, 2007.Tax incentives including 10-year taxholidays, exemptions from dividendand capital gains tax have beenannounced for venture capitalfinance companies.All persons who invest in venturecapital finance companies will havetheir investments deductible for taxpurposes.The withholding tax rates ondividends and rent will be reducedto the rate of 8%, while thatapplicable to management andtechnical fees will be reduced to15%.During 2007, government plans todevelop and implement a systemthat will enable the government toassess and collect income tax usingthe value of vehicles registered.The government remains focussedon entering into double tax treaties toeliminate double taxation on incomesearned in Ghana.Capital gains tax is to be reduced tothe rate of 5%.
Value Added Tax (VAT)
In addition to the existingrequirement to obtain an income taxclearance certificate (TCC), taxablepersons will now be required toobtain a VAT clearance certificate totender for contracts and to cleargoods from the ports.VAT on packaging materials used inthe production of drugs for thetreatment of HIV/AIDS, tuberculosisand malaria will be removed.All pharmaceutical products will bezero rated.
Customs and Excise
To rationalise the indirect taxregime and bring it in line withinternational trends, excise dutiesare generally no longer to becalculated on an ad valorem basis.Excise duties on beer, stout,branded spirits, wines, malt drinks,carbonated soft drinks, cigarettesand other tobacco products will betaxed at specific duty rates.Government intends to review thecurrent import duty exemptionregime to eliminate abuse and totarget the productive sectors of theeconomy.
 
PricewaterhouseCoopers Ghana Budget Highlights: Overall Summary 3
Overall Summary
The concessionary rate on rawmaterial imports has been reducedto 5%.
Sectoral Outlook
Agriculture
Ministry of Food and Agriculture(MOFA) will focus on the policiesand programmes aimed atenhancing agricultural output inorder to achieve poverty reductionas well as food security in thecountry.To ensure the welfare of cocoafarmers, the government hasresolved to pay a bonus for cocoapurchases for the 2005/06 maincrop season.The government is also to promotethe use of local rice and poultry byall public institutions.
Energy
In response to the increasingdemand for energy in the country,the government will restore andupgrade various energy generatingfacilities. The government, incollaboration with its developmentpartners, will initiate new energygeneration projects around thecountry.The Petroleum Exploration law isexpected to be reviewed in order tomake Ghana an attractivedestination for investments in hydrocarbon exploration.The government has also reiteratedits commitment to fully implementthe liberalisation of the downstreamsector. In the context of theliberalisation, the private sector willbe allowed to import crude oil forrefining.
Tourism
As part of promoting Ghana as atourist destination, the governmentintends to continue its participationin major international fairs and willembark on a strategy of promotingdomestic tourism within the country.
Road Infrastructure
The key milestone for the country isto become a transport hub for WestAfrica. To achieve this, thegovernment will be pursuing anumber of measures during the2007 financial year. Key amongthese is continuing with themaintenance and completion of on-going projects as well as initiatingnew development projects. Thesedevelopments will largely befinanced with the support of thenation’s development partners.To raise additional revenue for roadmaintenance, the government hasproposed an increase in the fuellevy of US$0.02 as well asincreases in other road user feesand levies.In a bid to enhance transportmanagement, the government willbe developing strategies tosystemise annual registration ofvehicles in the country.
Information Communication Technology(ICT)
During 2006 the telecommunicationindustry experienced significantgrowth marked by increasedsubscriber numbers.The government will focus ondeveloping the legal and regulatoryframework for the sector. Inaddition, it will adopt ICT in itsoperations in order to promoteaccountability, transparency andefficiency in its service delivery.
Health
The National Health Insurance Fund(NHIF) experienced a growth in itsregistered members in 2006 and thetarget is to continue expanding thecoverage in 2007. The governmentwill also continue to intensify its
of 00

Leave a Comment

You must be to leave a comment.
Submit
Characters: ...
You must be to leave a comment.
Submit
Characters: ...